Sustainability, i.e. responsible business conduct, goes by the acronym ESG (or CSR). It covers the area of business impacts on the environment, society and governance or management. It is:
E (environmental)
S (social)
G (governance)
Some areas or functions in a company relate to all three pillars. For example, the purchasing department checks how suppliers respect diversity in the workplace, human rights, but also how much emissions they produce, whether they have a code of conduct and so on.
Many of the principles and values apply to all employees - for example, whether they sort waste, use public transport or save electricity in the workplace. This is the responsibility of the HR department, which can educate employees about green office principles, set incentives or benefits such as a public transport ticket allowance.
Companies that operate responsibly are more attractive to new employees, including top talent. When all employees are engaged in ESG initiatives, a company's resilience and relevance in the marketplace increases. Organisations where individuals know that their work is meaningful and values-based are more successful. In this case, they are 2.7 times more likely to stay with the company. If they take pride in where they work, this likelihood is 2.2 times greater. That's according to a Great Place to Work survey of more than 1.3 million employees.
By 2029, Millennials (born 1981-1996) and Gen Z (born 1997-2012) will make up nearly three-quarters of the global workforce, compared to about half in 2019. It is for these groups that sustainability and responsibility in business are key. Recent trends suggest that 50% of HR leaders are also more focused on ESG/sustainability as a result (Mercer's Global Talent Trends 2022).
It is important to link theory to practice for everyone, including top management.
Start by building the knowledge base of your employees. When you raise their ESG IQ, they will be better able to think about how the organization can operate more efficiently. Globally, only 1 in 8 workers have one or more of the green skills we need.
Forms and content of training:
Examples:
SIKA: the Board of Directors, Group Management and all senior Sika managers participated in several meetings on ESG-related topics, Scope 1, 2, 3 emissions and the development of a "zero emissions" roadmap.
LG Chem: twice a year, LG Chem conducts online training on anti-corruption, responsible supply chain management, HSE, environment and information security. In addition, they have tailored ESG training based on job functions and positions.
Ask your employees about different areas such as remuneration, volunteering, discrimination (gender, age, LGBTI), operational health and safety, risks and opportunities for the company that they see in relation to ESG or well-being.
The company Georg Fischer conducted its first global D&I survey across all three divisions and its corporate headquarters in 2022. The survey measured employees' attitudes and perceptions of a diverse and inclusive workplace. In doing so, it identified areas for improvement.
Enable your employees to volunteer. Motivate, but don't force. Find out what they would like to do. Not everyone enjoys painting a fence or picking up litter in the countryside. Give your employees the space to promote the NGO they are involved in alongside their work. If they can involve their children and other family members in company activities, their interest will increase. There are companies that involve their customers, suppliers, retired employees, etc. in volunteering.
Progress must be measured, for example the European Standards for Reporting Sustainability make this possible. This includes many areas, for example: policies on own workforce and processes for engaging them, adequate pay, processes to remedy negative impacts and channels for own workers to raise concerns or pay metrics (gender pay gap, in general).
Under the ESRS standards, companies will report on how they are affected by, and how they affect, for example, climate, biodiversity, working conditions in the company and in the supply chain, surrounding communities or business behaviour. The first companies will have to prepare non-financial CSRD reporting as early as 2024. For listed SMEs, this obligation will start no later than 2029. Those companies that are affected will require data from their suppliers, customers and partners that measure sustainability.
In 2023, the European Parliament approved a legislative proposal to introduce pay transparency requirements. It wants to strengthen the application of the principle of equal pay for equal work or work of similar value between men and women. One way of demonstrating equal pay for male and female employees is through the internationally recognised EQUAL-SALARY certification. As an accredited audit partner, Mazars is authorised to carry out audits leading to this certification. The certification is done for any company or organisation worldwide in any sector that employs at least 50 people.
Rewards can be used to incentivise value creation. Companies often introduce it for top management.
Givaudan: 10% of top management bonuses are linked to KPIs on CO2 emissions and 10% to indicators on H&S and diversity in top management.
SAP: 20% of rewards tied to KPIs regarding customer loyalty (NPS score), employees and GHG (6 greenhouse gas) emissions.
EssilorLuxottica: the CSR criterion is part of the annual variable remuneration package of the company's executive directors and is linked to the efforts made within the framework of the "Eyes on the Planet" sustainability program. To reflect the importance of CSR in the Group's strategy, the weighting of the annual variable remuneration has been doubled in 2023. In addition, from 2022, the CSR criterion is also included in the annual variable remuneration for more than 15,000 employees.
Encourage and support the formation of employee resource groups (ERGs) that are interested in different aspects of ESG.
Communicate regularly about the importance of ESG and how they align with the company's mission.
Give employees the space to lead initiatives and make ESG-relevant decisions. When they feel that their actions can lead to real change, engagement will increase significantly.
Recognize and reward the efforts of employees and teams that contribute to ESG initiatives.
Management should exemplify ESG values in decision-making and day-to-day business operations. When employees see this, they are more likely to follow suit.
Three-quarters of employees who leave a company voluntarily leave because of their manager, Harvard Business Review points out. Conversely, workers who have a positive relationship with their manager are more committed, more willing to perform, and more satisfied. When leaders focus on their employees' strengths, they can increase engagement by up to 73%, according to a Gallup survey. According to communications expert Dale Carnegie, when employees feel their manager values and appreciates their work, their motivation and productivity increases. Companies with strong leadership outperform their competitors by up to 19% (McKinsey & Company).
The main attributes of ethical leadership are a clear vision, mission, values, goals, meaningfulness, going beyond self-interest, sustainability, or well-being. The main overlap with the ESG concept is in meaningfulness.
Employees are expected to become engaged when their basic needs are met. These are health and safety. If they feel safe at work, their potential begins to be unleashed, they discover a real value orientation, they build emotional attachments to the activity and the work itself. Others are motivated by this and join the initiative.
Another need is social belonging. For this, good relationships with stakeholders are necessary and integration into a circle of colleagues is essential. Engagement is also increased by appreciation, which is not necessarily financial, and recognition, which increases feelings of achievement and importance. Everyone has a natural need to grow not only professionally but also ethically. It is this that has spill-over into the society in which we live.
Leaders can thus influence not only their company, employees, suppliers, the environment, but also the country and society in which they operate through their attitude and business.
The success of a company goes hand in hand with engaged and motivated employees. Watch the recording of our webinar where Mazars experts presented the potential of linking sustainability and leadership topics in your company.
Rewatch the next in a series of free webinars on leadership with Zuzana Čmelíková, an expert on the topic of resilience at Mazars in Slovakia. Fill in the short form below and access the recording of the session.
Would you like to train your employees on the subject of climate change, while at the same time enjoying a moment of shared reflection?
For companies to succeed in the 21st century, sustainability and social responsibility must be at the heart of their business model.
Developing leadership skills and resilience competencies is essential for your team to effectively manage day-to-day difficult situations and challenges. It allows to adapt to rapidly changing conditions and environment. Your organization can also benefit from the potential positive impact on reducing employee burnout rates and related costs.
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